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The operators of a debt-relief scam have agreed to pay $2.3 million to settle Federal Trade Commission claims that they bilked student loan borrowers out of millions of dollars by pretending to be affiliated with the U.S. Education Department. In an announcement Monday, the FTC said a settlement order approved by a federal judge included an $11.7 million monetary judgment against the Los Angeles-based Student Debt Relief Group, most of which the defendants do not have the funds to pay.
According to the FTC, the defendants "tricked consumers into believing they were affiliated with the Department of Education, deceived consumers into paying up to $1,000 in illegal upfront fees to enter them into free government programs, and charged consumers monthly fees they claimed would be credited toward their student loans." Actually, the FTC says, "the defendants pocketed consumers’ money and responded to consumer complaints by changing the name of their companies rather than their business practices."
The FTC in October 2017 announced a federal-state law enforcement initiative taking on deceptive student loan debt-relief schemes, called Operation Game of Loans. This settlement is part of that coordinated effort.
